HR software firm Ceridian launched its on-demand pay product, Dayforce Wallet, in Canada Wednesday, as the Minneapolis-headquartered, Toronto-run company plans more financial services for workers. Here’s what you need to know.

Breaking up the biweekly cycle: Staff at participating Ceridian clients that opt in for the service can use a mobile app to transfer earned but as-yet undisbursed wages into a digital account, and will have a pay card to spend them. Ceridian’s payroll system was built to keep a current tally of what workers are owed. “If we are calculating people’s pay continuously, why not allow them to get access to it?” said CEO David Ossip in an interview with The Logic. 

Across the border: The company launched the Dayforce Wallet in the U.S. in May 2020. At the end of March 2021, 150 clients were offering employees the service, with another 300 in implementation. Firms in the health-care, financial- and professional-services, manufacturing, retail and hospitality sectors have adopted it. Ossip said clients offering the service have an easier time hiring and keeping staff, with voluntary attrition 42 per cent lower among employees who opted in compared to their colleagues who didn’t. Ceridian plans to launch it in the U.K., Ireland, Australia and New Zealand and will then move on to Germany and the rest of its Asia-Pacific markets. 

The long financial game: Ceridian’s clients have historically been the businesses that use its HR software, but the on-demand pay service turns their workers into a new user base. 

“We are looking at building out proper, full financial services surrounding the Dayforce Wallet,” said Ossip. Ceridian is working on a “streaming” model, allowing workers to opt in to having their wages flow directly into the digital account at the end of a shift or workday. In the next few months, it plans to launch a rewards program, with cashback on purchases at participating merchants. The wallet will also build in financial wellness tools, and Ceridian is considering features for bill payment and buy-now-pay-later purchases. 

Eventually, Ceridian will even seek “partnerships with other financial institutions around … mortgages, loan originations, and those types of services,” said Ossip. 

In February, the U.S. Treasury Department’s Office of the Comptroller of the Currency granted preliminary approval to the Ceridian National Trust Bank, although that charter doesn’t cover traditional banking activities.  

The fine print: Ceridian doesn’t directly charge companies fees to use Dayforce Wallet. Instead, it makes money on interchange fees for payment processing. In Canada, the cards will be issued by Peoples Trust Company; Ceridian has a similar arrangement with the Central Bank of Kansas City. 

The competition: Walmart, Pitney Bowes and other large firms offer U.S. workers access to advanced pay via third-party apps, while others bypass employers altogether. Ossip claims add-on services create paperwork and compliance issues, while Dayforce Wallet automatically generates pay slips and makes government remittances. Sector-specific competitors, like the restaurant-focused 7shifts in Saskatoon, are also working on earned-wage access tools and other financial services.

The analyst take: “We see Ceridian’s Dayforce Wallet as a differentiated offering in on-demand pay,” wrote Siti Panigrahi, managing director at Mizuho Americas, in a June research note, citing “precise accounting of benefits and taxes prior to scheduled paydays and allowing on-demand pay to happen largely without accounting error.” The service could generate at least US$500 million in revenue for Ceridian by 2026, Panigrahi projected, and the company “could also set the tone for on-demand pay’s next chapter through various financial partnerships (e.g., savings accounts, investment offerings).”